Daily Market Update

Turmoil in stocks helped the U.S. Dollar rise

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The U.S. Dollar is trading in favorable ranges to start the year based on growing fears across global markets hat plenty of 2018 problems will see the consequences in 2019.

Overview

Chinese and other manufacturing gauges across Asia are signaling a slowdown tracing its root problem back to the tariff war initiated between the world’s two largest economies. The Greenback’s safe-haven status can be fleeting, but it is the main feeling for traders and investors at the moment. Dollar could benefit if the globe flounders further this year.

Nevertheless, the economy here must remain robust to merit the dollar sustaining any gains. We have the Employment Situation to assess Friday after we see a taste of ADP Private Payrolls on Thursday. We think next week everyone will be back at full throttle and we will have a clearer picture of the dollar’s direction as all participants get back in the markets.

What to Watch Today…

EUR

The Euro climbed 1.3% in December, benefiting from resolution, at least on paper, to the Italian Budget proposal concerns and progress data-wise. Additionally, since the Euro-zone will no longer have quantitative easing support from the European Central Bank, data will be closely monitored and we do believe this: if indicators show consistency and advancement now that there is no monetary policy backing, the Euro will rise significantly in the next 12 months.

However, political pressures from anti-establishment groups that have gained some legislative power recently will keep attacking the established order in the EU and this will likely add downward pressure for the shared currency if those groups get further success. We get overall Consumer Price Index figures for the region on Friday, a major data day all around.

JPY

The Japanese Yen is currently around its strongest level since June 4th. As stock exchanges panic, the Yen gains and it is the exact situation we came into this morning that sees Asian activity at risk. We believed the Yen would appreciate eventually and our forecast materialized.

Shinzo Abe is still the Prime Minister, Haruhiko Kuroda is still the head of the central bank, Japan still holds a current account surplus, so plenty of items are reliable. Nevertheless, the country’s growth has been anemic for years and inflation has seen little to no growth. We will be rooting for the country, but if risk-appetite fades, it will be hard to root for the currency.

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